Financial Briefs

India and overseas

The Power Finance Corporation (PFC) has extended an additional financial assistance of Rs 26.26 billion to Rajasthan Rajya Vidyut Utpadan Nigam Limited (RRVUNL) to support its effort to comply with the new emission norms issued by the Ministry of Environment, Forest and Climate Change. The financial assistance will be utilised for the installation of flue gas desulphurisation and selective catalytic reduction equipment as part of the environmental upgradation works under way at the Suratgarh and Chabbra super thermal power projects, which have a capacity of 1,320 MW each. With this assistance, PFC’s cumulative sanction for the two projects stands at Rs 102.18 billion.

NTPC signs a term-loan agreement with HDFC Bank for Rs 15 billion

NTPC Limited has signed a term-loan agreement with HDFC Bank for availing of a loan of Rs 15 billion. The loan facility will bear an interest rate linked to the three-month marginal cost of fund-based lending rate of the bank and will be utilised by NTPC Limited for financing a part of its capital expenditure.

World Bank approves $250 million development policy loan for Rajasthan

The World Bank has approved a $250 million development policy loan for the improvement of the electricity distribution segment under the Power for All scheme in Rajasthan. The state government will get the loan under the Second Programmatic Electricity Distribution Reform Development Policy Loan for Rajasthan. The first such loan was approved in March 2017. The second phase of operation will focus on improving the credit ratings of the state discoms, attracting private investment in the renewable energy sector and upgrading service delivery.

Bajaj Hindustan to sell 17.51 per cent stake in LPGCL

Bajaj Hindustan Sugar Limited is planning to sell its entire 17.51 per cent stake in Lalitpur Power Generating Company Limited (LPGCL) in an attempt to deleverage the company. Bajaj Hindustan Sugar had invested around Rs 7,700 million in LPGCL and its stake is currently estimated to be worth Rs 11,000 million. As per the debt restructuring scheme, the company has sought the shareholders’ approval for the sale of its shares to Bajaj Energy Limited. LPGCL has completed work on the setting up of its 1,980 MW coal-based supercritical thermal power project in Lalitpur district of Uttar Pradesh and has been operating at full capacity since December 2016.

Axis Bank puts three gas-based power projects on sale

Axis Bank has invited expressions of interest for the sale of three gas-based power projects aggregating 1,476 MW. The projects are owned and operated by Lanco Kondapalli Power Limited, a subsidiary of Lanco Infratech. The company has failed to pay its dues to its lenders, led by Axis Bank, following which the sale proceedings were initiated. Lanco Kondapalli’s lenders recently acquired over 52 per cent stake in the company through strategic debt restructuring (SDR). The company has a debt of over Rs 30 billion.

Vedanta offers the highest bid for GCEL

Vedanta Limited has reportedly offered the highest price of Rs 25 billion to buy a controlling equity stake in GMR Chhattisgarh Energy Limited (GCEL). The funds will be used by GCEL for debt restructuring. The company has a 1,370 MW coal-based power plant in Raikheda, Chhattisgarh. The project is, however, currently stranded as it does not have PPAs with the state discoms, which has led to cost overruns and to the lenders (led by Axis Bank) invoking the SDR mechanism. Meanwhile, Adani Power has reportedly quoted the second highest offer price.

Global investments in electricity sector exceed those in oil and gas for the second year

Investments in the global electricity sector has exceeded those in the oil and gas sector for the second consecutive year, according to the International Energy Agency. This is on account of higher expenditure on grids for increased electrification. During 2017, the global energy investment stood at $1.8 trillion, of which $750 billion was invested in the electricity sector, while $715 billion was spent on oil and gas globally. However, the investment in renewable energy witnessed a decline of 7 per cent in 2017 as compared to the previous year.

ABB finalises $2.6 billion GEIS acquisition (Switzerland)

Swiss power and automation major ABB has announced the finalisation of its acquisition of General Electric Industrial Solutions (GEIS), GE’s global electrification solutions business. It marks the financial closing of a deal first announced in September 2017. The $2.6 billion acquisition will establish a supply relationship between ABB and GEIS. GEIS will be integrated with ABB’s electrification products division, which creates a global portfolio with a comprehensive offering in the North American market.

ADB approves $500 million loan for an 800 MW power plant (Bangladesh)

The Asian Development Bank (ADB) has approved a $500 million loan for the development of an 800 MW combined cycle power plant in Khulna. The total cost of the project is estimated at $1.14 billion, which will be partly financed by the Islamic Development Bank and the Bangladesh government, with a contribution of $300 million and $338.5 million respectively. The plant will be equipped with advanced water treatment processes to purify and recycle liquid waste. The plant is expected to provide electricity to 300,000 consumers and is slated for completion by June 2022.